3 Reasons to Invest in Multi-Family
In today's economy, there is a multitude of options for a person to invest their money in. From stocks and start-ups to REITs and more, how does one decide what's best for them and their lifestyle? A savvy investor will weigh their options against potential returns, risk and time. An expert investor will factor in the economy, future trends and potential disruptions.
As part of my job to identify the best avenue for investment for my clients, I have recognized that multi-family communities are not only considered safe investments but I also find they provide added benefits to my clients who are often times professionals looking to make passive income.
At Gray Spear Capital, I love investing in multi-family communities and I use our winning formula to get our investors great returns. Why do we continue to choose multi-family? Here are our top 3 reasons:
1. Millennials and Gen Z's: Truth is, today's generations are less inclined to buy a house, and why should they? Home ownership is simply not attractive to today's mobile generation. Millennials and Gen Z's want the freedom to move around. This doesn't simply mean move from one building to the other; they're often relocating for better work opportunities all the time which means this generation needs to stay mobile, ready to move anytime. Millennials and Gen Z's want to live in urban settings and are moving away from the suburbs. We are seeing a popular trend in people shifting away from suburbs and large homes and preferring smaller homes or apartments in convenient and walkable cities. This also means they get to enjoy more disposable income by not locking in their money in an expensive home with high taxes. This means we have a lot more demand for multi-family apartment communities in urban settings. Rent is simply cheaper and more convenient for today's young professional. Renting an apartment in a city allows today's youth to be mobile, and to not spend too much time or money "keeping up" a house.
2. Baby Boomers: It's all a game of generations. Baby boomers are now shifting to retirement homes which is upping the demand for quality retirement homes in warm and sunny locations. Do you know what's great about multi-family communities? They're easily converted to retirement communities. Building brand new communities are becoming quite expensive, especially considering land prices are soaring in urban locations which makes investing in older multi-family complexes is a great option to add value by renovating and improving. Multi-family communities are so versatile, given the right variables, one can be converted to a profitable retirement home.
3. Immediate Income: Investing in multi-family, and some other types of real estate, means you get to enjoy immediate income. Investors get monthly or quarterly distributions since the community is already making money from tenant rent. When investing in multifamily communities, a sponsor will often consider making upgrades to the community in order to raise rents, bringing in more monthly income. You're already looking at a 7% return in monthly distributions and this is before a sponsor or investor adds value to the investment in the form of community improvement. It's a win-win situation.
There are many more reasons to choose to invest in multi-family, like building wealth, and enjoying passive income. A real estate investor is literally making money while they sleep. Realistically, investing in any real estate is historically a sound decision and in time, will always prove to be safer than other options.
Hamza Ali